Overview
- The Copom unanimously cut the Selic by 25 basis points to 14.25% at its June 17 meeting, marking the third straight quarter‑point reduction in the bank’s cautious easing cycle.
- Policymakers described the easing as a calibrated, data‑by‑data process and raised the inflation forecast for 2026 to 5.2% and for 2027 to 3.7%, both above the 3% target.
- For the first time the bank explicitly named President Lula’s pre‑election fiscal measures as an upside risk that could weaken monetary policy’s ability to slow price growth.
- Officials also warned that supply shocks such as higher oil prices, El Niño weather effects, and global geopolitical tensions could force a pause or reversal of cuts, and markets are watching the bank’s forward tone for guidance.
- Lower policy rates are compressing government bond yields and making risk assets more attractive, which may boost investment and borrowing but will squeeze savers and test the tradeoff between growth support and price stability; the Selic had been at 15% for nine months through January 2026.